The CMO Is Dead

But there's a new title waiting

Article |
Fri, 11/02/2012 - 00:00

by: Dominique Turpin

I have some sad news: the chief marketing officer is dead.

Fortunately, I’m talking about the CMO position rather than a particular person. But the decline of the CMO’s influence is an alarming trend in companies that claim to put the customer first but in reality continue to be product-driven.

CMOs are increasingly powerless and peripheral. The CEO sets the overall strategy, the R&D and innovation teams design the product, and the CFO determines pricing and departmental budgets. The CMO, meanwhile, reports to a chief executive who often has only partial knowledge of the customer. No wonder some CMOs are considering a career change.

The CMO position is dead for several reasons

Most CMOs are not really immersed in marketing activities. By this I mean understanding, creating and delivering value to the customer. Too many CMOs are constrained, focusing on PR and communications and not on products or pricing, so as not to invade the space of the chief innovation officer or the CFO.

CFOs have become more powerful. This is partly the result of tough trading conditions and short-term pressure from financial markets. The CFO has taken control of pricing decisions and is winning the race to the very top. The evidence today is that most chief executives have a finance or engineering background, and few come from the ranks of sales and marketing.

Marketing impact is often hard to measure. Marketing is more art than science. It’s difficult to quantify the results of a marketing campaign, and to know whether all those millions of dollars spent have led to an increase in real sales. And when a downturn comes, the marketing budget is often the first to be cut.

Few grasp the concept

Nobody has a clear idea of what marketing is. It’s fuzzy. Ask 20 senior managers in any company what marketing is, and they will give 20 different answers. By contrast, most people would agree on a definition of finance or production.

In some cases, marketing is still powerful and central to the corporate DNA. There are companies with a visionary founder who has a great understanding of the customer, like Steve Jobs at Apple or Ingvar Kamprad at IKEA. And there are family businesses that are better than public companies at taking the long-term view needed in marketing.

But these cases tend to be the exceptions. At most companies the power of the CMO is being eroded almost by the day. Instead of grieving over this, CMOs can take the following practical steps to reclaim some of their lost power:

Get rid of the CMO title. Nobody understands it. Create the new title of CCO – Chief Customer Officer. This person must be the voice of the customer in the organization, taking views and messages from the market and spreading them internally. Changing a job title is clearly not enough, but there are other concrete steps that can be taken.

Get the CEO to be the CMO. CEOs can drive the customer-centricity agenda better than anyone else. They have the power to lead a company’s culture, increase customer focus and drive the recruitment of customer-oriented people. The CEO as CMO also sends a strong message throughout the organization that the customer is at the center of the company’s key preoccupations and that marketing is everybody’s job.

Get the CFO on board. This requires taking some of the fuzziness out of marketing. CCOs should try to produce hard numbers that show a return on investment and a clear impact on the company’s financials. They could also take a refresher course in finance to get a better understanding of where CFOs are coming from. Even something as simple as lunch with the CFO can help CCOs become more fluent financially.

Use customer knowledge to build influence. With backing from the big two in the C-suite, CCOs can use their teams’ customer knowledge to influence discussions of product design and pricing, and make a company’s offerings more sensitive to the market. Very few business leaders ask themselves “What are my customer headaches?” But this is such a good question. Companies that can provide a product or service that make people’s lives faster, easier, better or cheaper will always be on the right track.

Back in the 1950s, the management guru Peter Drucker wrote that a company has two and only two key functions – marketing and innovation – and that all other functions should support these. Back to basics: Objective number one for the CCO is customer-centricity. This focus must come from the very top and filter down through the whole organization so everyone has the incentive to add value to the customer. Although paying attention to the customer is common sense, unfortunately common sense is less and less common. The CCO must be the first step in the right direction.

So – goodbye to the CMO, hello to the CCO.

Dominique Turpin is the Nestlé Professor and President of the International Institute for Management Development (IMD), a business school in Switzerland. He co-directs IMD’s Orchestrating Winning Performance program.